The Ultimate Insider's Guide to Forex

Are you ready to finally be financially free? The latest way everyone is making online is through trading Forex. But what is Forex? Forex is the global marketplace for exchanging currencies. The exchange rate constantly fluctuates based on supply and demand. Learn about Forex in much more depth and gain all of the knowledge you need to start a successful trading journey.

Table of Contents:

Chapter 1: Introduction

Chapter 2: Basics of Forex Trading

Chapter 3: Fundamental Analysis

Chapter 4: Technical Analysis

Chapter 5: Risk Management

Chapter 6: Developing a Trading Plan

Chapter 7: Trading Psychology

Chapter 8: Forex Brokers and Platforms

Chapter 9: Advanced Trading Strategies

Chapter 10: Real-Life Case Studies

Chapter 11: Continuing Education and Resources

Conclusion

Number of Pages: 21

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CHAPTER 2: THE BASICS OF FOREX TRADING

Currency Pairs

As we've mentioned, currencies are exchanged in pairs on the Forex market. There are two currencies in every currency pair: the base currency and the quote currency. The exchange rate expresses the value of the base currency in terms of the quoted currency. These are the different currency pairs:

• Major Pairs: These currency pairs involve the most traded currencies globally, including the US Dollar (USD). Examples are EUR/USD, USD/JPY, and GBP/USD.

• Minor Pairs: Also known as cross-currency pairs, these involve important currencies other than the US dollar. Examples are EUR/GBP, EUR/AUD, and GBP/JPY.

• Exotic Pairs: One major currency and one currency from a smaller or emerging market economy are involved in exotic currency pairs. These pairs may show reduced liquidity and increased volatility. Examples are EUR/SEK (Euro/Swedish Krona) and USD/TRY (US Dollar/Turkish Lira).

Reading Forex Quotes

Understanding the Forex market requires you to know how to read quotes. Typically, a Forex quote looks like this: 1.1805 / 1.1800 in EUR/USD. The bid price, which is represented by the first number (1.1800), is the highest amount a buyer is willing to spend. The asking price, or the lowest amount a seller is willing to take, is indicated by the second figure (1.1805). The difference between the bid and ask prices is known as the spread.

Understanding Bid and Ask Prices

• Bid Price: The price at which a trader can sell a currency pair.

• Ask Price: The price at which a trader can buy a currency pair.
  

Market Participants

You will need to understand every participant in the market in order to get the hang of Forex trading:

• Retail Traders: Individual traders like you who trade Forex for personal investment purposes.

• Institutional traders: Big financial organizations that make substantial trades for their clients or for proprietary trading, including banks, hedge funds, and investment firms.

• Central banks: National banks that set interest rates, implement monetary policies, and intervene in the foreign exchange market to affect the value of their national currency.

Forex Trading Hours

The Forex market operates 24 hours a day, five days a week, divided into four major trading sessions: Sydney, Tokyo, London, and New York. Learning the overlapping hours of these sessions will help with finding good trading times.

Overlapping Market Sessions

• Sydney/Tokyo Overlap: Gives more volatility and liquidity in the Asian session.

• London/New York Overlap: This represents the most active period with high trading volumes, providing plenty of opportunities for traders.